Posts tagged analog
Many companies become successful after pivoting, iterating, or completely rewriting their original business plans, assumptions, and business models. Since no plan survives contact with reality, businesses often find themselves upturning initial assumptions and models. Getting to Plan B: Breaking Through to a Better Business Model outlines the process for putting together your “Plan A” and iterating your way to your Plan B. The book uses five business model elements (revenue, gross margin, operating model, working capital, and investment) as the basis for case studies which examine how companies have changed their approach.
Key elements of getting to to Plan A, Plan B, and beyond are: analogs (examples of companies doing similar things), antilogs (counterexamples or examples of failed approaches) and leaps of faith (provisional answers to fundamental questions about your enterprise).
Mullins and Komisar advocate carefully designing your business model as you create the other parts of your plan because it’s easy to lose sight of financial basics in the excitement about new ideas and market opportunities.
the uncertainty that surrounds most innovations and most new ventures can be significantly mitigated by comparing the plan on the table to other businesses already in existence
Analogs are useful because it’s likely that whatever it is you’re doing has been been done before to some extent so you can use what other people have learned to formulate your own plan. This saves you time and resources because you can essentially borrow or steal approaches that have been proven to work or can serve as models for what you want to achieve.
Looking to previous failures and contrasting approaches is an instructive way to construct your approach. Antilogs can provide useful counterpoints or signposts for lurking danger. Antilogs and analogs help you avoid re-inventing the wheel and leapfrog into the next set of questions and uncertainties.
Once you’ve positioned and designed your venture in relation to your analogs and antilogs it’s time to identify the handful of questions that are key to the value you will be delivering to your customers. That’s where “leaps of faith” come in. Mullins and Komisar say you now need to make your best guess and jump. Leaps of faith are essentially hypotheses you will test. Examples of leaps of faith are affirmative answers to questions like “will people buy and listen to music privately in a social setting?” and “will people legally download music to a portable device?”.
The Plan B process involves creating a dashboard grid which identifies analogs, antilogs, and leaps of faith for each of the five business model elements. This allows you to quickly compare your assumptions and hypotheses for each of your business model elements. The analog, antilog, and leap of faith process is repeated for each business model element to fine tune each and arrive at a complete view of your entire business model.
As the authors discuss the business models of companies like eBay, Toyota, Patagonia, and Silverglide, they highlight the strongest element in each company’s business model. eBay, Toyota, and Patagonia are shown to have strong gross margin approaches while Google and Silverglide were able to modify and invent new revenue models. In a concluding chapter, Mullins and Komisar discuss how the five business model elements interrelate.
Video: Analogs, Antilogs, and Identifying the problem you’re solving
Video: Identify Leaps of Faith
Video: The benefits of mapping Plan A